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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Casaubon who wrote (81167)9/20/2008 12:35:30 PM
From: Real Man  Read Replies (1) | Respond to of 94695
 
When you hedge your portfolio by buying a put option or
selling short the call option, the MM will enter the opposite
position. His position is then a bullish position.
In order to make that position market neutral, or delta-hedged, the
Market Maker must short some underlying shares to hedge his
market risk, and adjust that hedge dynamically (their
computers do that) as the market moves. Market Makers never
sell options unhedged.


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